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Posts by Jacob Ayers

074: Protecting Your Downside – Friday Fundamentals

dominoes isolated on white as an abstract management concept

It’s human nature to be on the look out for threats. Our early ancestors had to be aware of threats every day. This same caution has been passed down thousands of years. Only today, our threats are much different. While threats like predators stalking our villages, or entire populations being eradicated by the plague no longer exist, we still have our own threats in today’s society, from litigation to financial loss and health.

As real estate investors, we’re aware of the risks associated. Litigation and financial loss are legitimate threats that happen all too often. We are aware of these risks, and therefore appropriately protect ourselves from them when possible. We carry insurance policies to protect against damages. We protect our assets with legal structures. We screen our tenants. All of these help protect our downside.

“The first rule of investment is don’t lose money. And the second rule of investment is don’t forget the first rule. And that’s all the rules there are” – Warren Buffett

Another way to protect your downside is by a supplemental insurance called a Home Warrant Policy or a Residential Services Agreement. A home warrant policy is an insurance policy carried by the homeowner, which covers standard appliances, HVAC systems, and plumbing. If one of these items breaks, you can be faced with a large repair bill or an even bigger replacement cost. A home warranty policy insures these items will remain in working condition, so long as the damage isn’t from neglect or lack of maintenance in most cases. These polices typically range from $500-$650 per year and have a deductible of $75-$100.

Many beginning investors will try to do things on the cheap, and some even forego a Home Warranty Policy. If your systems and property are relatively new, then it might not be as much of a risk to elect out of a home warranty policy. However, if your property or appliances are on the older end with deferred maintenance, then it might be wise to pay for a home warranty policy. In many cases the seller or seller’s agent will pay for this home warranty policy for the first year.

There is no one right way for everyone when considering insurance, asset protection strategies, and personal risks. Be mindful of protecting your downside, and look to increase your upside. With this principal in mind, you’ll be more prepared to deal with the inevitable threats on your path to financial freedom and beyond.

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073: How Technology is Changing Real Estate with Craig Cecilio

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Craig Cecilio is a principal in DiversyFund, Inc. and the founder and CEO of California Coastal Funding Group, Inc. He has worked in the real estate industry for nearly 20 years. Over the course of his career, he has participated in the development of over 1,000 single family residences in California as either a joint venture equity partner, lender or sponsor.

Mr. Cecilio also owns a California-licensed real estate lending business for residential renovations and ground-up construction (residential and multi-family) in California coastal markets such as San Diego, Orange County, Los Angeles and San Francisco, a loan servicing business and a real estate crowdfunding website known as Diversyfund.com.

Since 1997, Mr. Cecilio has financed nearly $1 billion of real estate assets, having raised over $100 million in debt or equity for real estate transactions in the last three years, and has developed and managed over $25 million of residential property (renovations and ground-up). Mr. Cecilio also manages a real estate bridge loan fund that pre-funds many of the transactions later sold the DiversyFund investor platform.

Mr. Cecilio is a graduate of the University of Colorado at Boulder.

Key Points
Crowdfunding, simply put, is real estate syndication leveraged with technology
Who should invest in real estate through crowdfunds
Using crowfunding opportunities to learn about real estate
What you need to do to be SEC compliant
Investing through crowdfunding vs. investing in real estate on your own
Lightning Questions
What was your biggest hurdle getting started in real estate investing, and how did you overcome it?
The typical hurdles of raising capital were the same for Craig as anyone else doing the same thing – developing the track record as a first time crowdfunding platform.
Do youn have a personal habit that contributes to your success
Craig is forward thinking and solution based.
Do you have an online resource that you find valuable?
Craig learns from the news and networks.
Investopdia
What book would you recommend to the listeners and why?
The Laws of Success in Sixteen Lessons by Napoleon Hill
If you were to give advice to your 20 year old self to get started in real estate investing, what would it be?
Buy more real estate!
Resources
Diversy Fund

071: The Art of Raising Capital with Rich Dad Advisor, Darren Weeks

Darren Weeks

Darren Weeks was an ordinary “working stiff” with a passion for investing. As a teenager, he began investing in penny stocks and mutual funds. He bought his first rental property as a student at the University of Alberta. But somewhere along the line, Darren started to blend in with the pack, to “go with the flow.” For several years, he did what everyone else was doing – working 9 to 5 to make ends meet and looking forward to the weekends. He worked in accounting and sales roles for a variety of organizations and never felt like he was getting the most out of life.

Everything changed in 2001, when a friend recommended Darren read a book called “Rich Dad Poor Dad” by Robert Kiyosaki. The book so perfectly articulated all of his beliefs about money and reignited the passion for investing he had in his youth. Shortly after reading the book, he made the life-altering decision to start Fast Track to Cash Flow, a company that would teach Canadians the principles laid out in the book, in addition to the lessons Darren had learned about money over the years. And the best part, all of Fast Track’s seminars would be free of charge!

Fast forward to present time. Darren has amassed an investment portfolio consisting of over 5,000 rental properties across North America, tens of millions of dollars in energy interests and hundreds of acres of land. He is also the largest individual shareholder in the Port of Falmouth, the world’s largest cruise ship terminal, which is operated by the Royal Caribbean Cruise Lines.

Key Points
How to find capital investors
Raising capital for other people’s deals
Networking with potential investors
Don’t mention a return to your investors, instead ask them what would make them happy
Working for someone in return for experience
Lightning Questions
What was your biggest hurdle getting started in real estate investing, and how did you overcome it?
Darren lacked money and the rules around borrowing money. Darren was creative in his approach and bought almost a dozen properties without any money of his own.
Do you have a personal habit that contributes to your success
Darren practices gratitude daily and credits much of his productivity to the Hoffman Institute
Do you have an online resource that you find valuable?
Rich Dad Radio with Robert Kiyosaki
Mastering the Rockefeller Habits by Verne Harnish, along with his weekly newsletter email
What book would you recommend to the listeners and why?
The ABC’s of Real Estate Investing by Ken McElroy
Scaling Up by Verne Harnish
If you were to give advice to your 20 year old self to get started in real estate investing, what would it be?
Education. Darren recommends taking courses with money back guarantees. Take educational courses.
Resources
The Art of Raising Capital: for Entrepreneurs and Investors by Darren Weeks

DarrenWeeks.com

Black Rifle Coffee Company Canada

070: Focus on Success – Friday Fundamentals

Focus concept - handwriting on a napkin with a cup of espresso coffee

You as an individual have a set of skills particular to you. These skills are like a toolbox filled with tools. You can use them to work on, repair, and build many different things.

But just because a plumber has a pipe wrench, doesn’t mean he is the best fitted (see what I did there??) to go wrenching on a fire sprinkler system. Just because the electrician has a ladder doesn’t make him the best person to paint ceilings.

You see, everyone has a particular set of skills or tools. But more importantly the ones with the most success are those who know how to use their skills in a particular niche. The same goes for real estate investors.

For those of you who are starting out, and those who remember when you were just starting, understanding this toolbox analogy is important. Sure, each of you have the ability to buy a single family home, or wholesale deals to other investors, or even syndicate apartment buildings. But where is your niche? There are so many ways to make money with real estate. It’s hard to be great at multiple, and impossible to be great at every way. So where is your niche?

Warren Buffet famously said ” Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

What did Warren Buffet mean by this? The point of diversifying is to have losses offset by gains in other areas. However, the opposite is also true. Gains are offset losses.

So what does all of this mean? What’s the point I’m making? Simple! Find your niche and excel at it. Become the best you can be. Develop all the skills required to be the best. Learn from the best. Surround yourself with the best. Soon enough, you’ll be the best.

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